Legislature(2007 - 2008)BUTROVICH 205
02/29/2008 03:30 PM Senate RESOURCES
| Audio | Topic |
|---|---|
| Start | |
| Large Mine Permitting Update | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| + | TELECONFERENCED | ||
| + | TELECONFERENCED |
ALASKA STATE LEGISLATURE
SENATE RESOURCES STANDING COMMITTEE
February 29, 2008
3:35 p.m.
MEMBERS PRESENT
Senator Charlie Huggins, Chair
Senator Bert Stedman, Vice Chair
Senator Lyda Green
Senator Gary Stevens
Senator Bill Wielechowski
Senator Thomas Wagoner
MEMBERS ABSENT
Senator Lesil McGuire
COMMITTEE CALENDAR
Large Mine Permitting Overview
PREVIOUS COMMITTEE ACTION
No previous action to consider
WITNESS REGISTER
ED FOGELS, Director
Office of Project Management and Permitting
Department of Natural Resources (DNR)
Juneau, AK
POSITION STATEMENT: Presented Large mine permitting update.
ACTION NARRATIVE
CHAIR CHARLIE HUGGINS called the Senate Resources Standing
Committee meeting to order at 3:35:20 PM. Present at the call to
order were Senators Wagoner, Stevens and Huggins.
^Large Mine Permitting Update
3:35:53 PM
ED FOGELS, Director, Office of Project Management and
Permitting, Alaska Department of Natural Resources (DNR), said
he would present the condensed version of large mine permitting
that the department had been giving to public forums around the
state. He said the state's large mine team is monitoring a
couple of Canadian mines because they are in drainages that flow
into Alaskan waters. He added that Canada is actually letting
several division members sit on the project team as full
participants.
SENATORS WIELECHOWSKI and STEDMAN joined the committee.
3:37:36 PM
MR. FOGELS said he would first go over the process the
department generally uses for permitting a major mine project, a
quick mining 101. He wanted them to understand that their
process doesn't guarantee a "yes" and that most major permits
are issued through other agencies and what DNR does most is
coordination of the permitting process.
3:39:19 PM
He started with how mineral rights get established in the first
place. In general state land is to be managed as multiple use;
the rights are established through Article 8 of the
Constitution. Those rights are acquired through staking where a
prospector goes out and finds something interesting and puts his
four stakes in the ground and has it recorded. On private and
Native corporation land (ANCSA), the mineral rights are acquired
through negotiation with the land owner.
He said typically state land use plans determine the primary use
of state land and can close up to 640 acres of land to mining.
For closures of more than 640 acres, and the state legislature
has to do make that decision.
CHAIR HUGGINS asked if the private land owner has subsurface
rights or do those belong to the state.
MR. FOGELS answered that the Native corporations have the
subsurface rights on their lands. Other private land can vary,
but the state retains the subsurface rights on its land. He said
if there is no land use plan in place, then the default is
typically that the state land is open to mineral entry.
3:40:51 PM
MR. FOGELS presented a typical timeline for a mine, noting that
the permitting phase starts about in the middle of his chart and
goes for about three years. He said a major mine will need to
have federal involvement through the National Environmental
Policy Act (NEPA) and an environmental impact statement (EIS).
For that reason, it's difficult to permit a mine in less than
three years and it may take as long as five.
3:41:06 PM
SENATOR GREEN joined the committee.
CHAIR HUGGINS asked if it took 13-15 years before a mine can
really go into operation.
3:41:59 PM
MR. FOGELS indicated that was correct; he added that post
closure and monitoring goes on for 60 years and sometimes much
longer - maybe even forever. He said the Pogo project required
52 necessary authorizations and many agency requirements. Again,
he mentioned that DNR's role is to act as the coordinator
3:42:49 PM
SENATOR STEVENS asked if the list includes a Department of Fish
and Game (ADF&G) permit.
MR. FOGELS replied that the only permits the Department of Fish
and Game would issue would be if a mine happened to be in a
special fish and game area. The permitting function that was in
ADF&G was recently transferred to the Office of Habitat
Management and Permitting in the DNR. However, the Governor has
introduced an executive order to move it back to ADF&G.
SENATOR STEVENS commented that there is no ADF&G permitting
necessary for something like Pebble.
MR. FOGELS answered that is correct; however he said that ADF&G
is very involved in the permitting process.
CHAIR HUGGINS noted that the executive order is effective on
July 1.
3:45:00 PM
MR. FOGELS displayed a thousand-page permit application package
for Pogo and said the materials they would get for a mine like
Pebble or Donlin will be ten times that big - the point being
that it's not just a little form they fill out.
3:45:36 PM
SENATOR WIELECHOWSKI asked if all the mistakes in mining - like
a dam with tainted lead water breaking in Colorado - had been
corrected yet.
MR. FOGELS replied that a lot of that happened before modern
environmental regulations were in place, and it is his job to
make sure those kinds of things don't happen again. It's all
about water quality and the geochemistry of rock, a science that
has evolved tremendously in the last 15 years. They have to
focus on what the water quality impacts will be long-term rather
than just a couple of years. He said more fish are downstream of
Fort Knox and Red Dog than before the mines were there.
3:47:35 PM
He explained that any time there is a federal authorization, the
NEPA gets invoked and for a large mine that means an EIS, and
that is the real driver to the process. The state agencies "just
plug in on that train and move along with it." They can't
shorten the process, but must work within its scope.
3:48:45 PM
MR. FOGELS said the Pogo Mine is a very "small large"
underground gold mine near Delta Junction. He said the agency
discussions were started in 1997 and the EIS was initiated in
August 2000. He explained that up to now Alaska has had large
mines and mom and pop placer operations, and very little in
between. So, amongst the spectrum of major mines, Pogo is one of
the smaller ones in terms of footprint; Fort Knox and Red Dog
have a much bigger footprint. He is not talking about monetary
worth or production value.
SENATOR STEVENS asked if state permits are issued one at a time
as they are completed or all together.
MR. FOGELS answered that there are 52-plus permits. The ones
that were issued in December were the major permits that would
allow the mine to start construction. Probably a dozen minor
permits would follow. Some quality permits typically follow
after the major permits are issued. The air quality permits, for
instance, can't be adjudicated until they get specific details
like model numbers on generators that the company won't even
know until they get the green light to proceed. The major
permits are the ones that the corporate board room looks at and
says, "Okay, you've got the bulk of them done, you know, spend
the money. Develop the project."
The typical EIS process involves baselines studies before the
mine goes in - what Pebble and Donlin are doing right now. Those
result in reams and reams of documentation.
3:52:02 PM
SENATOR WIELECHOWSKI asked where the Pebble process is now.
MR. FOGELS replied the company hasn't done its feasibility study
yet. They are probably still working on the prefeasibility
study, which is a general study to determine the reasonable
potential for developing an economic mine. The feasibility study
gets taken to the bank for financing.
CHAIR HUGGINS asked who is paying for that.
MR. FOGELS answered the company.
CHAIR HUGGINS asked where Pebble is in terms of years.
MR. FOGELS replied the initial exploration happened over 20
years ago when the claims were staked by Cominco. It sort of
went dormant and no one was interested in the property. Their
timeline started when Northern Dynasty came on board about five
years ago.
SENATOR WIELECHOWSKI asked if the legislature would have to
eventually decide whether to proceed with Pebble or not.
MR. FOGELS replied that a lot of pieces of legislation are
before the state legislature right now that could affect its
progress, like the clean water initiatives. Under the current
process, issuing the permits is an executive decision by each
department.
CHAIR HUGGINS noted a news release that said, "Judge says clean
water initiative unconstitutional-AP." He asked if he was
familiar with that initiative.
MR. FOGELS answered yes; the Fairbanks judge said it is
unconstitutional, but the judge in Dillingham said it is. So
that has to be resolved. There are two clean water initiatives,
one and three. Three is a lot less stringent and the Fairbanks
judge said that one is okay to go.
CHAIR HUGGINS asked when Alaskans could expect to hear from the
Supreme Court on the ruling.
MR. FOGELS said he couldn't venture to guess.
MR. FOGELS said the state coordinates the process and tries to
streamline it. For instance, they provide draft decisions and
environmental impact statements; all the public meetings are
coordinated so the public can come to one meeting and get all
its state and federal agency questions answered. He said they
are not "cutting corners," they are just trying to synchronize
so the public can participate in a meaningful way.
CHAIR HUGGINS asked him how he got this job and what his
experience is.
3:58:24 PM
MR. FOGELS replied that he started working for the state in 1986
as an intern with the Division of Geological and Geophysical
Surveys. He started working in the lands section of the
department and did land use planning for a number of years. He
then worked in the coal regulatory program for a number of years
where he managed the coal regulatory program. At that point
(1995), he was asked to start working on the other projects that
were beginning to ramp up. The department needed better
coordination because the industry couldn't get a straight answer
out of any one agency.
4:00:33 PM
CHAIR HUGGINS asked who is at the center of the coordination
role.
MR. FOGELS answered that he is the director of the Office of
Project Management and Permitting and their job is to have the
coordination role within the state. Mining coordinators are
assigned to each project.
He mentioned that every state permit has some kind of a public
process loop and even though everything is coordinated, all the
comments have to be taken into account by each individual permit
authorization. There is a lot of public participation for Donlin
and Pebble right now even though the permitting hasn't started.
Once the EIS starts, the formal public process begins.
He said the federal government requires government-to-government
consultation with the tribal governments. Every authorization
has its comments associated with it even though they might be
asked for all at once.
SENATOR STEVENS asked if they recognize the tribes as
governments.
MR. FOGELS answered the state doesn't, but the feds do. The
federal government-to-government outreach is just a vehicle to
talk to those tribal entities in more depth and are part of the
NEPA process. The federal government is required to offer the
process to the tribal governments that don't always accept it.
If they do, then the federal government is required to formally
communicate with each tribal government.
4:03:28 PM
SENATOR GREEN said she understands the feds calling them
government-to-government meetings, but she was concerned that
the state is acknowledging that might also be involved in
government-to-government talks. She said that it should be made
clear that is not what the state is doing.
4:04:04 PM
MR. FOGELS agreed. He then went on to discuss whether the state
ever says "no." Yes, the state says "no" many times, he said,
but it's not that simple. Each permit has several or many yes or
no decisions within it. The state will say "no" to a particular
component of an application and the company has to go back and
redesign it.
4:05:05 PM
CHAIR HUGGINS asked for a 30-second burst on the Kensington Mine
in Juneau that got derailed when people thought it was going
forward.
MR. FOGELS answered there was always a lot of opposition from
environmental groups on the method of tailings disposal which
was putting the tailings in an alpine lake. The agencies
reviewed that and had a choice. The company had already received
permits years ago for a whole different mine plan. They decided
that mine plan was uneconomical and came back with a new one
that required a whole new EIS. The original permitted project
had a dry stack tailings facility on 160 acres of wetlands. The
new proposal put the tailings in a 12-acre natural lake, much
smaller than the other footprint. The agency's job was to
evaluate the relative environmental merits and weaknesses of
each proposal and they decided that it looked highly likely
under the Slate Lake tailing disposal option that the lake could
be restored post-closure into a lake that has as much
productivity as the original one, if not more. Biologists and
the agencies were convinced that could be done. That was part of
the weighing process and that option was permitted.
However, the federal Environmental Protection Agency had a
conflict with the Army Corps of Engineers that created some
ambiguity about the legality of putting those tailings in a
lake. That is what the environmental groups challenged and won
in the Ninth Circuit. So, the company has worked with the
environmental groups that brought the suit to come up with plan
B that goes back to the dry stack, but a smaller and newer
design. They have all agreed it can be done and they are now
working with the agencies to permit plan B.
4:08:05 PM
SENATOR STEVENS asked if the state ever really says no when it's
all said and done.
MR. FOGELS reminded him that there are only five operating mines
in Alaska that have been permitted over the last 20 years. It's
not like they are getting hundreds of these things to decide on
every year. The AJ Mine project went through a rigorous
permitting process that the company finally gave up on.
Sometimes the applicants pencil out a project and decide not to
apply if they don't think they can do it. Typically when an
applicant applies for a permit, they have done enough homework
to know the project is doable.
4:10:41 PM
SENATOR WIELECHOWSKI said it really comes down to cost. If the
company can afford to do it, his office generally says "yes."
MR. FOGELS answered that is "a pretty fair assumption....the
technology is there to protect the environment on these mining
projects."
SENATOR WIELECHOWSKI speculated that it's pretty likely the
Pebble Mine will be permitted. It is a $500 billion project.
MR. FOGELS replied that the company hasn't actually submitted
their applications. Some permitting obstacles might be so
expensive that even Pebble backers can't afford it. There are
other risk factors like having 1,000 employees, the additional
hunting and fishing pressure, access and visual impacts that
can't be mitigated with money.
4:13:34 PM
SENATOR STEVENS asked if he was saying the environmental stuff
could be handled, but not the other stuff like human impacts.
MR. FOGELS responded yes; the population changes the use
patterns in the area.
4:14:20 PM
SENATOR STEDMAN reflected on what will happen to the region when
they create employment and communities that can afford to
operate as communities and improve the state's tax base.
He said a good example would be to look at Southeast Alaska when
the timber industry came in. It now has more deer, more salmon,
more roads and better schools, hydro electric capacity and
communities that are self sustaining. A lot of economic good was
left behind when the industry moved on.
CHAIR HUGGINS said he actually hunts and fishes in the Pebble
Mine area and in talking to local people, he found two or three
things appealed to them that had nothing to do with the mine
other than jobs for family and friends. The first one was that
it would bring down the cost of power generation, the second was
it would lower the cost of commodities because a road would
exist to bring things in versus barging or flying items in. He
was surprised at how receptive people were, but he also remarked
that the caribou had left that area and that is a concern. There
is also a great sensitivity to the business of fish and their
survival.
MR. FOGELS said these mines have tremendous potential to
contribute to the economy of the region.
4:18:21 PM
CHAIR HUGGINS said the Donlin workforce had an astonishing
turnover based on sociological difficulties.
MR. FOGELS remarked that it's a pretty spectacular story. No one
could pass the drug and alcohol testing in the beginning, but
now it has an almost 100-percent pass rate and almost all their
managers are from the local villages.
4:18:52 PM
MR. FOGELS went back to the mining 101 format and said Alaska
has three basic types of mining - placer mining that are mostly
smaller mom and pop operations, underground mines like Greens
Creek and Pogo and open pit mines like Fort Knox and Red Dog.
(In this presentation he wouldn't touch on coal mining which is
strip mining.)
Showing a picture of the Fort Knox project, he said ore is in
discrete bodies within the rock and is surrounded by waste that
has to be removed. Sometimes the waste has some metal in it that
can be put aside and maybe mined a little later. But essentially
they are going after the ore bodies that have been delineated by
drilling.
The waste rock is called "tailings" and they are put in a pile
next to the pit somewhere; the ore is taken to the mill where it
gets processed. In Alaska tailings are typically treated one of
two ways: compressed and filtered with the water squeezed out
and stacked in a "dry stack tailings" fashion or put in a wet
tailings impoundment system." Dry stacked tailings, because they
are dry and therefore more stable, but this method is also more
expensive. The other method is to slurry the tailings by putting
them in what is called a "wet tailings impoundment" behind the
dam. Typically a layer of water is kept on top of the
impoundment to keep the tailings wet. In some instances that
keeps them from oxidizing and releasing harmful substances.
4:21:24 PM
SENATOR WAGONER asked him to explain what happens to wet
tailings.
MR. FOGELS answered that wet tailings are the consistency of
flour with the water layer being about 2-20 ft. The tailings
settle and become impermeable over a period of 10 to 20 years.
They can become an impermeable liner that is maybe hundreds of
feet thick. The mining company has to show the division studies
about the tailings and what they are going to do over time and
what the chemistry of the tailings will be. A really large mine
will generate a lot of tailings and they can be split into good
and bad tailings. The good tailings are essentially clean and
can line a good part of the tailings impoundment. A system can
be designed where the good tailings can theoretically contain
those bad tailings very handily. This method must be engineered
well and reviewed by his department. No one has designed a
tailings facility like that in Alaska, but they have been
designed that way in other parts of the world.
4:23:47 PM
His department has to deal with three basic waste products:
waste rock, dry stacked tailings and wet tailings. They are
really concerned about the geochemistry of the rock, because
when the rock is ground up, it will weather faster and the
minerals and chemicals will leach out faster that if it were
still in a solid form. He said there is a wide spectrum of solid
and waste rock; the tailings can be as clean as can be with no
danger of ever leaching anything out or it can be really
reactive and pose serious problems. Examples of clean rock are
Fort Knox, which is essentially a granite body that has no
chance of ever releasing any metals. The tailings from the Red
Dog are very reactive, however. So when it rains, the sulphides
will release metals; so there will be bad water coming out of
those piles. The mining company has to do extensive sampling.
SENATOR WIELECHOWSKI said he went to the Red Dog this summer and
was impressed. He has read about how it's the most toxic in the
United States and he asked if they are doing what needs to be
done up there. He asked what exactly the potential for toxic
dust is.
MR. FOGELS said he believes they are doing what they need to do.
The story about it being the most polluting mine in North
America stems from the EPA's toxic release inventory and how
they define "toxic release." Whey they move rock from the pit at
Red Dog to the waste rock pile, they move 100 tons of rock. That
100 tons of rock has huge amounts of lead and zinc in it and the
move within the mine site is counted as a release. That's why
those numbers are so huge. It's not that actual pollutants are
getting out into the environment, and it isn't called
"pollution" on the EPA's website, but it's still very
misleading. There are more fish downstream now than when the
mine started, mainly because the rains were going over areas
that were so mineralized in the first place that it was killing
off the fish. Those fish are being tested now at Red Dog, Fort
Knox and Greens Creek, and those fish are happy.
The Red Dog has had a dust problem that is generated from
concentrated lead and zinc ore. That concentrate was getting
into the wheels of the trucks and the toxins would be released
from the truck while it was driven 50 miles to a site. The
problem has been recognized and the company bought a whole new
fleet of trucks with hydraulically sealing lids and they now
have truck washes. He is very comfortable that the company has
done a huge amount of good in reducing the dust emissions. The
problem now is how to deal with the contaminated tundra.
4:29:48 PM
MR. FOGELS explained that some minerals in a rock can generate
acid, which is a huge problem; other minerals such as
carbonates, consume acid. If a rock has equal amounts of acid-
generating minerals and acid-consuming minerals, then
theoretically, all the acid should be consumed by the other
minerals. A company can identify which rocks are non-acid
generating and those can be used for road construction; the
potentially acid-generating rocks have to be treated specially
to make sure the water doesn't, in the long term, get into the
environment. Consultants use another test by putting rocks in
big columns and percolate water through them for 100 weeks or so
to get an idea of what the long-term potential is for releasing
bad water. That gives the agency a good sense of what the
chemistry is. No water is released before it runs through a
treatment facility.
4:32:53 PM
He said in the old days there were bad water issues, but they
understand those issues much better now and are a lot better at
mitigating them - even much better than 10 years ago.
MR. FOGELS provided them with a list of the main state permits
and he touched on the details of a few. He started with the
Department of Environmental Conservation (DEC) since it has one
of the most significant permitting roles. Their waste management
permit actually permits the waste facilities. This permit
basically says they understand the mine's water quality impacts
potentially in the long term from the facilities and that the
facility design addresses it adequately.
The NPDS permit is a federal permit that actually allows water
to be discharged. It is issued by the EPA, but the Alaska DEC
must put its stamp of approval on it, as well, in terms of a
certification. The DEC also has to approve the Army Corps of
Engineers wetlands permit.
He said the DNR approves the reclamation plan; regulations say
that the mine has to be returned to a stable condition
compatible with the post-mining land use. If it's on state land
that means it has to be compatible with what the state's land
use plan says. If it's private land, the land owner gets to
determine what they want their land use to be. If they want it
flat to build a Wal-Mart there, it's up to them. His job is to
make sure the state's resources are protected including
critters, water and air quality.
MR. FOGELS emphasized that the financial assurance is very
important because it applies to the reclamation plan and to
almost all the other permits. It is sometimes called "bonding,"
but that word isn't used much any more, because that it refers
to a specific type of financial assurance. Financial assurance
is just a financial mechanism that assures that the State of
Alaska has the money to clean up the mine if the company cannot.
4:35:44 PM
He showed a picture of the Illinois Creek Mine where the rock
dumps had been recontoured after closure, indicating that
vegetation had taken hold and that this mine had been done
properly. It's a science, he said, and it can be done wrong,
too.
He said for the financial assurance the companies give him
detailed engineering analysis and hundreds of pages of
spreadsheets on what it would take to reclaim the area including
cost of grass seed, rental equipment, fuel and labor. When they
settle upon a number, the companies used to give the state
surety bonds, but those are hard to get now. Almost all of them
give the state letters of credit with major financial
institutions. If they bail on their credit, the bank cuts the
state a check.
SENATOR WIELECHOWSKI asked if the state was using the
reclamation money that Red Dog put into this bond to force them
to pay for the dust clean up.
MR. FOGELS replied at this point the idea is for them to clean
it up. The state would have to deal with it if the mine closed
and Teck Cominco went bankrupt and left the scene.
SENATOR WIELECHOWSKI asked if they are doing that.
MR. FOGELS replied they will be; the agencies are trying to
figure out how best to clean the tundra up. At the extreme, they
could tear it all up, haul if off and incinerate it, but then
they would have huge swaths of mud that would be really hard to
revegetate. Since it will be an industrial road for over 60
years, it might be shown that over the years with rain water the
metals will leach into the ground and not be an issue. They
don't have an definitive answer for that question yet.
SENATOR WIELECHOWSKI said he assumed Red Dog went through this
massive permitting process, but still the contamination
happened. He asked if other things are happening that Mr. Fogels
isn't catching that the legislature needs to be concerned about
in the mining world.
MR. FOGELS emphasized that Red Dog was permitted 20 years ago
before the statutes for reclamation bonding were even there. T
today it would be a whole different process. Red Dog is
complicated because it was permitted before a reclamation
statute was in place. His agency has worked for four years with
the company to develop one and it's almost done.
4:40:24 PM
SENATOR WAGONER said he gets a lot of statements and emails
wondering about letters of credit. A lot people have the idea
that if the company goes broke or leaves Alaska, that letter of
credit doesn't stay with the mine. He asked him to explain how
it works.
MR. FOGELS explained that the letter of credit essentially binds
the bank to provide the funds to the State of Alaska should the
company not be able to live up to the requirements of the
reclamation plan. It's between the state and the bank and it's
his job to make sure that that bank is a major financial
institution that is licensed to do business in the U.S. and has
the resources to cut a large check for the state.
CHAIR HUGGINS asked how long it takes the state to react to a
report of difficulty for an operating mine and what is at their
disposal to act.
MR. FOGELS replied that it depends on the mine and what the
problem really is. No mine is perfect. It depends on what the
threat to the environment is. They work with mines continuously
to make course corrections to fix things. They do mine
inspections as often as possible and try to get to most mines at
least quarterly and more if an issue is going on. If a problem
comes up, they will be on it right away. If it's an imminent
threat to the environment, something has to be done right away.
Stop orders can be issued, for instance.
SENATOR WIELECHOWSKI asked what if the total amount of bonds in
the entire state is $278 million and the Pebble Mine has a
leakage into the Kvichack River, for instance, that causes $1
billion worth of damage in lost fishing. Who pays for that?
MR. FOGELS answered that the bond is for the state to be able to
shut down the existing operation, reclaim it and make sure the
water is treated. They can only bond so much and not for a total
catastrophic failure. They can't cover every possible
eventuality. Typically the monitoring ring around the mine
allows one to see a problem developing. It's very rare that a
dam splits and everything washes downstream. Usually, there is
some seepage in an unexpected place and the monitoring picks it
up. They go onsite and work with the company to correct it. The
idea is to watch it closely so that problems can be caught when
they are very small. It wouldn't cover an incident like the
Exxon Valdez or no one would be able to afford to do business
here.
4:45:37 PM
MR. FOGELS said there are two parts to a financial assurance.
One is to do the dirt work and putting the place to bed in the
immediate term and the other is to take care of the water
treatment. At Red Dog they all believe the water will have to be
treated forever. So they have a water treatment plant there that
costs $4 million/year to operate. Therefore, the state has a
trust fund in place that will generate enough interest to pay
for it - plus unexpected contingencies. Dams typically need
them; the Kensington permit for the Slate Lake dam had $1
million trust fund, although that won't get built now. He said,
finally that financial assurance applies to all U.S. and non
U.S. corporations. Foreign nations are just as liable to follow
our laws as anybody else; the financial assurances don't care
where the company is from.
SENATOR STEVENS asked if the mines in Canada offer the same
protections as U.S. mine laws.
MR. FOGELS replied that he is comfortable with Canadian mining
regulations and water quality standards; in some places they are
stricter than ours. British Columbia has more mining going on
and they have a lot of experience with these projects.
CHAIR HUGGINS said one reclamation project in Alberta put the
same surface terrain back in place because they were
reintroducing buffalo to that area. He explained that the oil
sands mining in Alberta is more akin to coal mining, which is
sort of strip mining where you dig your first hole, you take the
coal or oil sands out, you put that dirt somewhere, then you dig
the second hole and put it back into the first hole; you dig
your third hole and put your dirt back in the second hole and
you sort of march along. You can kind of create the land
contours to be similar to what existed before.
4:49:34 PM
MR. FOGELS summarized that the bond amounts vary with long-term
obligations and water treatment. The amounts are reviewed at
least every five years to make sure that circumstances haven't
changed. He said the reclamation plan for the Red Dog, as well,
can actually offer something back to the community.
SENATOR STEVENS asked if the pit at Fort Know would be used as a
lake and recreation area.
MR. FOGELS answered that the Fort Knox reclamation plan provides
for a lake that will take about 70 years to fill up. If the
granite rock surrounding it is determined to be safe, it could
become a recreational body of water.
4:51:55 PM
He said that every mine has dams for either water supply or
tailings. DNR has a mine safety engineer who certifies all dams
whether they are for mining or not, and they have seismic
standards as well. Financial assurance is required for them.
Dams are designed to leak, he said, otherwise the water will
build up within the core of the dam and destabilize it. They
check on where that water goes, its quality and what happens to
it when it comes out the other side of the dam. Dams have to be
taken care of as long as they exist.
4:53:49 PM
Title 41 permits are issued by DNR's Office of Habitat
Management and Permitting that will soon be moved to the DF&G.
Essentially, permits are required for any work in fish bearing
waters. Monitoring is the key, he said; every mine has to have a
net around it that monitors every aspect of the environment so
that problems can be caught as they develop rather than waiting
for a disaster to happen. Monitoring ground water in particular
is essential in discovering problems early.
MR. FOGELS said that the agency is audited, as well, by third-
party experts. The audit is put out to bid and is done by some
big environmental engineering firm like HDR Golder that sends in
a team of 15 people. They will spend close to a year auditing
every aspect of the mine and the agencies.
4:56:08 PM
He summarized that eight agencies are involved in the permitting
process: the Division of Mining, Land and Water, the Division of
Habitat, the Office of Project Management and Permitting, the
newly created Division of Coastal and Oceans Management to do
the coastal zone reviews, DEC's three main divisions of water,
air quality and environmental health are all involved, and the
Department of Fish and Game, even though they may not have
authorizations to issue, is still involved to provide
information.
The DEC large mine permitting team comes from the statute that
named DNR as the lead player in the coordination of large mining
projects in the state. There is a companion statute to the
duties of the commissioner that puts DNR as lead for all
resource development projects, but this is the one specific to
mining. They created a team back in the Fort Knox permitting
days and the same core group of people has been working on these
mines close to 20 years now and have accumulated a lot of
expertise. He urged the legislators to use them as their experts
and to ask them technical advice on any particular component. If
something comes up that they don't have expertise on, like
geochemistry, they'll hire it out. The team is involved from pre
permitting to post closure and also conducts the inspections
after the permitting.
Another important point, he said, is that all of the agencies'
costs are billed back to the project applicant. They have MOUs
with every mining company they are working with and these
companies are billed every six months for all state agency time
incurred by a particular project. He has $1.2 million to $1.3
million in MOUs that run his budget and the budgets of all the
other agency people.
4:59:42 PM
SENATOR WIELECHOWSKI asked how Alaska's tax structure on mining
compares to other jurisdictions'.
MR. FOGELS answered that he was in the midst of trying to put
that information together for a current piece of legislation.
Some states have higher tax rates and some have lower. The
payback to the state is increasing now. Mining is different than
oil and gas; it's very capital intensive in the beginning.
SENATOR WAGONER said the tax amount depends on whose land the
mine is on. He said the Pebble is on state land and that land
was set aside by the state for mining. He asked what royalties
the state would receive on that land.
MR. FOGELS answered the state would receive a 3 percent royalty
on net profits, a mining license tax of 7 percent and a
corporate income tax of 9 percent.
SENATOR WAGONER remarked that the oil companies pay 25 percent
on net profits and mines pay 3 percent and this mine is now
projected to produce $500 billion. He wondered if 3 percent was
a fair and equitable share for the state to receive from this
sector.
5:02:39 PM
SENATOR STEVENS said he keeps hearing from one person he has
great respect for that for the Pebble mine the one issue he has
the most trouble understanding how it will end up is the dam.
Experts say that is a critical issue. Yet Mr. Fogels showed them
a slide that implied that it's a fairly benign thing. He asked
if a catastrophic earthquake damage to the dam would be benign
or could it damage the Bristol Bay resource below it.
MR. FOGELS answered that you can't answer that question until
you see what the mining company proposes to build. "It is
technically possible to build anything given enough money." The
dams on the Pebble site are going to be a huge concern. Some of
the areas where dams are proposed have many hundreds of feet of
glacial till or overburden on top of bedrock. It's always best
to build a dam and key it into bedrock. If you can't reach
bedrock, you have to have some kind of permeable material
between the dam and the bedrock which is a conduit for seepage.
He explained:
You can place grout curtains, which are slots full of
concrete and other materials, pretty deep now with
technology. It's very spendy and, again, that
technology is improving by the day. So, by the time
that Pebble - maybe they submit their permits - I
don't know when - they may have some solution to
really show that they can drop a grout curtain to
bedrock and seal it up.... As regulators, we're going
to be looking at that very carefully.
He speculated that maybe the tailings could be split apart to
where 80 percent of them are very benign and 20 percent are
reactive. A tailings facility could be designed where the
reactive tailings are far enough back, like one mile behind the
dam, to where even if it cracked wide open, they wouldn't
escape. But, without seeing the actual designs, he couldn't tell
it that would actually work or not. But the concepts are there.
CHAIR HUGGINS thanked him very much for his presentation and
adjourned the meeting at 5:06:23 PM.
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